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	<title>Barilliance eCommerce Personalization Blog &#187; recommendation engine</title>
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		<title>Recommendation engine for e-commerce sites, build vs. buy?</title>
		<link>http://www.barilliance.com/blog/2010/01/recommendation-engine-for-e-commerce-sites-build-vs-buy/</link>
		<comments>http://www.barilliance.com/blog/2010/01/recommendation-engine-for-e-commerce-sites-build-vs-buy/#comments</comments>
		<pubDate>Sun, 31 Jan 2010 16:05:36 +0000</pubDate>
		<dc:creator>Ido Ariel</dc:creator>
				<category><![CDATA[Product recommendations]]></category>
		<category><![CDATA[recommendation engine]]></category>
		<category><![CDATA[conversion]]></category>

		<guid isPermaLink="false">http://www.barilliance.com/blog/?p=101</guid>
		<description><![CDATA[Some of the online retailers we talk to, realize the value of cross-sells and up-sells and decide to embark on a &#8220;DIY path&#8221;. I may be biased here but I think product recommendations are one area in which you don&#8217;t want to reinvent the wheel.
There are 2 reasons why a DIY approach does not make [...]]]></description>
			<content:encoded><![CDATA[<p>Some of the online retailers we talk to, realize the value of cross-sells and up-sells and decide to embark on a &#8220;DIY path&#8221;. I may be biased here but I think product recommendations are one area in which you don&#8217;t want to reinvent the wheel.</p>
<p>There are 2 reasons why a DIY approach does not make sense in this case. The first is the development cost of building a system that works, and the second is the learning curve of optimizing it.</p>
<p>So how difficult is it to develop a recommendation engine? online retailers who decide to build a recommendation engine are not aware of the various components that need to be in place. Here are just a few them:</p>
<ul>
<li>The recommendation engine should track every major activity shoppers perform on the site including viewed products, categories and brands; items added to the shopping cart and purchased ; search keywords they used ; traffic source visitors arrived from, Geo-location data, and the list goes on&#8230;</li>
<li>The system must support multiple recommendation types and should be able to display the right one (and more than one on a single page) based on where the user is at the purchase funnel (if you have less than 10 algorithms your system is extremely naive)</li>
<li>Finding correlations between items/users is easy. The hard part is to choose which correlations should be taken into account and which should be ignored</li>
<li>The system should have built in a/b testing and reporting capabilities so that it could be optimized and demonstrate its value.  This point is very critical as <a href="http://www.getelastic.com/measuring-cross-sell-success/" target="_blank">few online retailers </a>actually measure the impact of their homegrown systems</li>
<li>The system should have an interface that allows marketers to control the outputs of the recommendation engine based on different variables.</li>
</ul>
<p>The second reason I mentioned is the experience it takes to optimize such a system. There are many things that will determine the impact a recommendation engine will have on the business, and if it&#8217;s your first time building one and it&#8217;s a one-off project there is no chance you are going to know them or invest the time to learn them. In fact you are probably going to develop a very naive system and you&#8217;ll stay with v1 for a long time. You will not test different widget designs or various placements on the page.</p>
<p>The decision to build or buy a recommendation engine should be ROI based. You need to consider the impact it will have on your business versus the cost of development.  Building a very naive system may seem cheap but will also likely to deliver poor results and without supporting systems you&#8217;ll never know it.</p>
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